South Carolina Gov. Henry McMaster renewed calls for the sale of the state-owned Santee Cooper utility Wednesday, after the announcement of a merger proposal for the state's largest investor-owned electric provider.
SCANA Corp., owner of South Carolina Electric & Gas, announced an all-stock merger proposal between Dominion Energy and SCANA, under which SCE&G electric customers would get $1,000 cash payments at closing of the deal and a 5% rate reduction as partial recompense for utility charges they paid toward the failed twin nuclear reactor project at the V.C. Summer Nuclear Generating Station.
“Under the proposed agreement between SCANA and Dominion Energy, SCE&G ratepayers will get most of the money back they paid for the nuclear reactors and will no longer face paying billions for this nuclear collapse,” McMaster said, calling it progress in his quest to hold utilities responsible for the failed project.
Still unresolved, McMaster said, is the problem of the state’s 700,000 electric cooperative customers “who face the prospect of having their power bills sky rocket for decades” to pay off Santee Cooper's more than $4 billion in debt for its share of the two unfinished reactors.
“The only way to resolve this travesty is to sell Santee Cooper,” he said. “There is more work to be done, but today, we are headed in the right direction.”
Santee Cooper, a public power agency formally known as the South Carolina Public Service Authority, has $7.7 billion of outstanding debt. Of that, $4.4 billion is comingled in the authority’s portfolio and was issued to pay for its share of the reactors.
Santee Cooper is a component unit of the state created in 1934 by the Legislature. Its website says it supplies power to more than 2 million South Carolinians, including the state's 20 electric cooperatives in 46 counties, which receive power from the Central Electric Power Cooperative Inc.
Central Electric receives more than 80% of its energy needs from Santee Cooper under a cost-of-service contract through 2058, paying a pro rata share for existing resources, including the suspended nuclear project.
On Tuesday, Santee Cooper announced without explanation that board chairman Leighton Lord had resigned his position as of Dec. 29. His departure follows that of long-time chief executive officer Lonnie Carter, who stepped down in August after the decision was made earlier that month to abandon the twin reactor project.
McMaster reportedly has sought Lord’s resignation since early December, accusing him of not cooperating with the governor’s office on the nuclear reactor project, according to Power Engineering magazine.
In a presentation about the proposed merger, Dominion said that it would write off more than $1.7 billion of new nuclear development capital and regulatory assets for V.C. Summer units 2 and 3, which will not be built.
“This allows for the elimination of all related customer costs over 20 years instead of over the previously proposed 50-60 years,” the presentation said.
The proposed 5% reduction in residential rates for SCE&G customers will consist of refunds of amounts previously collected from ratepayers as well as a pass-through of lower corporate taxes the utility will pay as a result of the federal tax bill signed by the president on Dec. 22.
“The take-it-or-leave-it deal falls far short of protecting ratepayers from absorbing the costs of the nuclear fiasco, while replacing the unneeded nuclear plant with unnecessary natural gas capacity instead of cheaper and cleaner energy alternatives,” Friends of the Earth said in a release Wednesday.
FOE said the merger proposes an initial rebate to SCE&G electricity customers “for a small amount of the money already paid for the V.C. Summer nuclear reactor construction debacle,” and it would require that a typical customer continue to pay 13% of her monthly bill for a period of 20 years for the abandonment costs.
SCE&G is expected to file a formal abandoned nuclear project cost recovery petition with the South Carolina Public Service Commission around Jan. 8, which FOE said would provide “important details on Dominion's proposed deal.”
“Friends of the Earth and Sierra Club will respond aggressively to any proposal which fails to protect ratepayers and assure a clean energy future for South Carolina,” the groups said.
The merger announcement did not state what would happen with V.C. Summer unit 1, an existing nuclear reactor that SCE&G owns with Santee Cooper.
The Dominion-SCE&G deal still must be approved by state and federal regulators.